Decarbonization is gathering pace, DNV report shows: Shipowners continue to order larger vessels with dual-fuel engines, indicating that the shift toward alternative fuel technologies is progressing at about the same pace as last year, according to DNV ’s Maritime Forecast to 2050 (pdf). By gross tonnage, 8.9% of the global fleet can currently operate on alternative fuels, while 51.1% of ships on order are designed for such fuels — both slightly higher than last year’s 7.4% for operational ships and 49.5% for ships on order.

A problem of conversion: As of the report's release, some 91% of the world's operating tonnage can only run on conventional oil fuels and can fully decarbonize with oil fuel sourced from biomass or green hydrogen — bio-MGO and e-MGO — the global supply of which remains uncertain. Another alternative is to convert to alternative fuels or adopt onboard carbon capture. Among vessels on order, 48.9% of total tonnage and 73.5% of ships face the same limitation.

Decarbonization trends vary, from ship to ship: Shipping decarbonization seems to vary according to whether the ship in question is a bulker, tanker, or containership, according to the report. Bulk carriers usually have lower asset values and less predictable routes, making it hard to justify the extra cost of conversion. In turn, only 0.6% of existing bulkers can run on alternative fuels compared to 5.2% of those on order. Containerships — which have more predictable routes — show 4.7% of them having alternative fuel systems, compared to 76% of those on order. The stark difference is owed to a higher willingness from freight buyers in this segment to pay a premium to reduce their greenhouse gas emissions (GHG).

Shipping needs access to low-GHG fuels…: Maritime players will have to seek out low-GHG fuels — such as biofuels — as regulations like the International Maritime Organization’s (IMO) Net-Zero Framework (NZF) come into effect, the report finds. There are also major headwinds facing low-GHG adoption, evidenced by the fact that DV found only 4% of hydrogen-derived low-GHG fuel project pipelines successfully reached their Final Investment Decision, with around 1% reaching operational status. The challenge is that suppliers are seeing higher cost pressures, uncertain market demand, and industry-wide economic hurdles.

… as well as carbon storage infrastructure: While global carbon dioxide storage is projected to grow by 25% by 2030, available capacity remains quite limited, as it is reserved in advance. Most of the available capacity is being booked by large industrial emitters, with whom it is easier for operators to secure steady carbon dioxide emissions from — compared to many individual ships with small, irregular amounts.

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